Alcoholic liver disease (ALD) is a primary consequence of heavy and prolonged drinking. ALD contributes to the bulk of liver disease burden worldwide. Progression of ALD is a multifactorial and multistep process that includes many genetic and environmental risk factors. The molecular pathogenesis of ALD involves alcohol metabolism and secondary mechanisms such as oxidative stress, endotoxin, cytokines and immune regulators. The histopathological manifestation of ALD occurs as an outcome of complex but controlled interactions between hepatic cell types. Hepatic stellate cells (HSCs) are the key drivers of fibrogenesis, but transformation of hepatocytes to myofibroblastoids also implicate parenchymal cells as playing an active role in hepatic fibrogenesis. Recent discoveries indicate that lipogenesis during the early stages of ALD is a risk for advancement to cirrhosis. Other recently identified novel molecules and physiological/cell signaling pathways include fibrinolysis, osteopontin, transforming growth factor-β-SMAD and hedgehog signaling, and involvement of novel cytokines in hepatic fibrogenesis. The observation that ALD and non-alcoholic steatohepatitis share common pathways and genetic polymorphisms suggests operation of parallel pathogenic mechanisms. Future research involving genomics, epigenomics, deep sequencing and non-coding regulatory elements holds promise to identify novel diagnostic and therapeutic targets for ALD. There is also a need for adequate animal models to study pathogenic mechanisms at the molecular level and targeted therapy.